Subject to status and referencing

Reply to the comment left by ameliahartman at 21/06/2019 - 20:43
Amelia

That now makes a bit more sense. I did wonder when you posted before how you could afford to do what you are doing if you are only making £30 per property. So you are retired and your husband is semi-retired and presumably then you don't need the income so it doesn't matter to you. I'm guessing the properties aren't mortgaged because at £30 per property you are running a big risk for a lot of work if the properties are mortgaged.

Reply to the comment left by Michael Barnes at 23/06/2019 - 16:18
The extract that I posted was from the Government guide that can be downloaded here: https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/696191/hbopg-part-4-recovery-of-overpayments.pdf

As with all legal matters it is nuanced and open to interpretation so it is difficult to generalise or reduce it to simple sound bites, but the point that I made was that there is always the possibility that the LA or DWP will look for and perhaps find grounds on which they can recover overpayments from a landlord who has received direct payment. I think JJ is correct in saying that they have an obligation to take all reasonable steps to recover overpayments but only from the person responsible, who is not necessarily the landlord. The guide contains some examples but they probably do not cover the situations where the right to recover might be open to challenge.

For a full understanding you would need to read the whole guide and probably look at the legislation as well.

Reply to the comment left by Seething Landlord at 24/06/2019 - 13:34
I should have taken my own advice and read the whole guide, which I still have not done, but have noted that there is a whole section on write-offs which shows that the LA have discretion as to whether recovery should be pursued and sets out various suggested criteria to be considered.

Reply to the comment left by Michael Barnes at 23/06/2019 - 16:18I think Seething Landlord has just done that for you. But quoting his previous post.
"Following the April 2006 amendments to the HB Regs, LAs *must* recover an overpayment caused by a misrepresentation or failure to disclose information from the person *or persons* who actually misrepresented or failed to disclose that information.
Before accepting direct payments, a landlord should be made aware
• of their *duty to report any changes of circumstances* that they might *reasonably be expected to know* might affect the claimant’s entitlement to benefit
• that the LA may decide an HB overpayment is recoverable from them"
If that's correct the LA has an obligation to recover the money they've paid from a person who in their view could be 'reasonably expected to know' the tenants circumstances and misrepresented or failed to disclose the information.
So consider. You have tenants in receipt of benefits. Perhaps you are doing all the work that Amelia is doing for (if I have remembered correctly?) 37 properties x £30 per month x 12 = £13.2K per annum? And you are going into a great deal of work to understand the tenants' personal circumstances to find out at the start of the tenancy whether they can afford the rent or not. You find out that when the tenants have been in your property for some time that they are probably no longer eligible for benefits. The local authority could easily decide because you know the tenant's affairs intimately that collectively you and the tenant are persons who did not disclose information from you and claw back the money.
So what do you do then? Write to the local authority and tell them that you suspect that the tenant is no longer entitled to benefits? And when you've done that, they stop paying and you evict them for non-payment?
I wonder under those circumstances how long it would take before you got control of your property again. I doubt your relationship with the tenant would be particularly good by then. I wonder if the High Court would decide in your favour if you had to go to court to regain control of your property.

Reply to the comment left by JJ at 24/06/2019 - 10:27
"£30 per property you are running a big risk for a lot of work if the properties are mortgaged."

You'd need a hell of a big reserve fund too.

Assuming that income is after paying for maintenance/voids/costs
(i.e 4 new boilers pa, 4 new doors pa, 4 new kitchens pa, 4 new bathrooms pa, 15 new re-carpets pa (her figures), 1 new roof per 2 years, 4 EPC's, 37 insurances, 37 cp12's, 7 EICR's etc )

But what about reserves for changes in law?

This lot are bad enough but what if Corbyn's Labour get into power? For example;
Compulsory licensing for 37 properties at £780 each = 30K
Council tax on 37 properties about 50K pa
Rent control
Section 24 (part 2) scrapping 20% tax 'relief' on finance costs
Section 24 (part 3) all property income taxed at the higher rate
Scrapping section 21 & 3 year tenancies = 5% ? arrears rate, which means an average of 2 properties out of 37 permanently not paying.
Sure, most of that would get passed on to tenants eventually and policy reversed once the carnage ensued but it would be a big initial hit.

With a portfolio that size only just in positive cash flow, you'd need a massive, and liquid, reserve fund.

Anything else would be highly reckless when housing 37 mostly (?) vulnerable families.

Just doesn't add up to me.

Reply to the comment left by Seething Landlord at 24/06/2019 - 13:53
So on the one hand the letter of the law says that the LA has an obligation to go after the funds they have paid to you to house the tenant; and on the other hand you say that there's a separate bit in the manual which says that the LA has discretion as to whether they go after you or not. So in addition to all the work that Amelia is doing (and all the work ploughing through all those manuals to try and work out where you stand) it looks as though you'd need to generate an additional heap of paperwork to cover your a**e just in case they did come after you because whether the LA does or doesn't is at their discretion, not yours.

And if you do all that you can aspire to make £30 per month managing 37 properties, so probably not generating a significant return on the capital employed in your business, or on the time you spend running it.

I must say, if that's what you have to do, it's not looking particularly attractive to house"DSS" tenants just at the moment. I doubt my agent would be wildly enthusiastic about it.

I guess when Universal Credit comes in and you don't get paid at all for housing "DSS" tenants that will put the final nail in the coffin.

Reply to the comment left by JJ at 24/06/2019 - 17:00
JJ please do not make any business decisions based on anything that I have said. The Guide is only 41 pages long and written for LA staff, not lawyers so is quite accessible and I strongly advise you to read it and form your own view if these issues are important to you. I only have a passing interest as we do not receive any direct payments of benefit and are unlikely ever to do so.

Reply to the comment left by ameliahartman at 25/06/2019 - 05:08
"But I noticed council tax on that list, and that’s £50,000 saved, as the tenants pay it."

At the moment. See;

https://news.rla.org.uk/landlords-would-pay-tenants-council-tax-under-new-labour-plan/